By Teresa Rivas

Stocks were down sharply across the board this morning, but homebuilders stood out for their weakness.

In recent trading, Toll Brothers (TOL), PulteGroup (PHM), D.R. Horton (DHI), KB Home (KBH) and Lennar (LEN) were all down more than 5%.

This comes despite upbeat data this morning. Existing-home sales rose 4.2% in May to a seasonally adjusted annual rate of 5.18 million, ahead of the 5 million economists were expecting and the highest levels since November 2009, which was fueled by the impending end of the first-time homebuyer tax credit. Median prices for existing homes grew to $208,000, the highest since 2008.

Rates for 30-year mortgages also declined in the week ending June 20, to 3.93% from 3.98%, after rising for six consecutive weeks. A year ago, the rate was 3.66%. Some have worried that rising interest rates would scare off buyers that have begun to return to the market.

About Stocks To Watch

Earnings reports, corporate strategies and analyst insights are all part of what moves stocks, and they’re all covered by the Stocks to Watch blog. We also look at macro issues, investor sentiments and hidden trends that are affecting the market. Stocks to Watch gives you the full picture of the U.S. stock markets, all day long.

The blog is written by Ben Levisohn, a former stock trader who has covered financial markets for the Wall Street Journal, Bloomberg and BusinessWeek.